MAB awaits decision on proposed ceiling prices for domestic airfare

The carrier is studying and assessing the impact to its business, should the proposal be implemented


MALAYSIA Airlines Bhd (MAB) is still gathering information on the government’s recommendation to introduce ceiling prices for domestic flights, as presented by Deputy Transport Minister Datuk Abdul Aziz Kaprawi at the Parliament on Monday.

Izham says the national airline is looking at its entire network particularly within the Asia Pacific that could offset such constraints

MAB group CEO Captain Izham Ismail said the carrier is studying the matter and assessing the impact to its business, as well as the aviation ecosystem in the country, should the proposal be implemented.

“We are waiting for more data points before assessing the impact to our business.

“What are the ranges? The cap? Which sectors? Is it during Hari Raya, all-year-round or the month of June?” Izham told reporters after unveiling MAB’s brand-new campaign, “Malaysian Hospitality Begins With Us”, at the refurbished Golden Lounge at the Kuala Lumpur International Airport (KLIA) in Sepang yesterday.

During the Parliament session, Abdul Aziz said the Malaysian Aviation Commission (Mavcom) is conducting a survey, and may recommend putting a cap on fares that can be charged by airlines to ensure a win-win situation for consumers and airline companies.

Abdul Aziz said the government and Mavcom generally do not set rules on flight fares, but complaints by passengers have warranted the study.

Izham, while acknowledging the pressure MAB is facing in the domestic sector, said the national airline is looking at its entire network, particularly within the Asia Pacific that could offset such constraints.

“The domestic sector is very, very competitive. MAB is sandwiched between the lowcost carriers and other airlines that fly domestically,” he said.

The latest report by the Centre for Aviation, or CAPA, showed that domestic traffics for both Malaysia’s full-service airlines Malindo Airways Sdn Bhd and MAB at KLIA have dropped by 28% combined over the past six months.

Meanwhile, low-cost airline AirAsia Bhd saw its the domestic business growing by 18%, benefitting from capacity reductions by both its competitors.

AirAsia’s share of the domestic traffics at KLIA is now 66%, compared to 55% a year ago, and KLIA accounts for 65% of total domestic traffic in Malaysia, which increased by 4% to 25 million in 2017.

For MAB, Izham said the airline will remain cautiously optimistic on the domestic market, while strengthening its overall network especially the Asia Pacific.

“Our objective is to remain relevant for the domestic operations. But, as a premium airline, I don’t think we will compete with the low-cost carriers,” Izham added.

Domestically, Izham said its operations, including the Sabah and Sarawak crossings, will remain positive as the overall networks consolidate.

Last year, MAB expanded its network to China with four new routes including Nanjing Haikou, as well as increased frequencies to Seoul.

The national carrier will also resume its flight to Brisbane, Australia, targeted to begin in June this year.

After having received its fleet of Airbus A350-900 last December, the London routes became more efficient with the new extra widebodies.

MAB also deployed more widebodies on its high-traffic routes such as India, Japan and Korea.

Izham said he is driving the group to reach break-even this year and growing the network to 5% after completing its MAB Recovery Plan (MRP).

On the MRP, Izham said MAB is not looking for any acquisition by foreign airlines at the moment.

In addition, Izham said MAB is in the request for information (RFI) stage with the original equipment manufacturers to expand its fleet.

MAB is targeting to complete the RFI and request for proposal exercise by June this year, and eyeing every type of aeroplanes that suit its networks strategy.